UK Telegraph: Two-thirds of millionaires left Britain to avoid 50p tax rate

[btfoom]

http://www.telegraph.co.uk/news/poli...-tax-rate.html

Almost two-thirds of the country’s million-pound earners disappeared from Britain after the introduction of the 50p top rate of tax, figures have disclosed.
George Osborne, the Chancellor, announced in the Budget earlier this year that the 50p top rate will be reduced to 45p from next April. Photo: Getty
In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs.

This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election.

The figures have been seized upon by the Conservatives to claim that increasing the highest rate of tax actually led to a loss in revenues for the Government.

It is believed that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes.

George Osborne, the Chancellor, announced in the Budget earlier this year that the 50p top rate will be reduced to 45p from next April.

The number of people declaring annual incomes of more than £1 million has risen to 10,000. However, the number of million-pound earners is still far below the level recorded even at the height of the recession and financial crisis.
Last night, Harriet Baldwin, the Conservative MP who uncovered the latest figures, said: “Labour’s ideological tax hike led to a tax cull of millionaires.
Far from raising funds, it actually cost the UK £7 billion in lost tax revenue.<rest at link>


Last line emphasis mine. Raising taxes on the very wealthy does not work. One big reason - they can easily get out of the taxable area.

[twa]

It's good to have options, which money gives you

[Destino]

Patriotism, so long as it's cheap.

[PeterMP]

So you have to differentiate between three different things, that this can't and doesn't:

1. Them leaving.
2. Them doing things to decrease their taxable income.
3. A temporary increase in the "rich" based on "non-rich" doing things w/ their investments to avoid paying the tax in the future.

For example, from my perspective if people increase their charitable giving in and effort to decrease their taxable income that isn't really a loss (depending on what the charity is).

If people shift their investment startegies to more long term investment philosophies where they don't show a lot of immediate income vs. taking short term profits out, which show up as taxable income, then that's actually probably good for the economy (long term growth and investment being better than short term profit grabbing long term).

In addition, you have to go deeper than this does. Unless things are different in Britiant the wealthy probably had plenty of time to plan for the tax increase. Just comparing two years is likely badly flawed.

Take somebody that is border line. They have a bunch of money invested, but they know they are going to have to liquadate some of those assets in the next few years. They also know the tax rate is going to go up. It might make sense for them to liquidate them the year before the tax increase goes in and therefore artificially raise their income, but pay at a lower rate than they would in the future.

Then after the tax increase has been added, if there is any chance of it being repealed, you have the opposite effect. I have money invested, but if I take it out now, I'm going to pay a higher rate. If I can hold on a year or two, then there is a chance the rate will go down so I'm going to do that.

That has the net effect of lowering the number of people at the top rate.

The thing you have to do is look at places where it has been stable. How many did you have and how much growth did you have 5 years before you changed the top rate, and how many did you have and how much growth did you have 5 years after the change?

[alexey]

...
Last line emphasis mine. Raising taxes on the very wealthy does not work. One big reason - they can easily get out of the taxable area.

Yeah it's like trying to get rid of cockroaches in a high-rise building.

[Jumbo]

C'mon. God-fearing patriotic job creators wouldn't turn their back on America in a time of need and split just so they can stay even more than super-rich. Some things matter more to people than just more money on top of already vast piles of money. These are not disgusting usury materialistic sociopath traitors. Limeys are different. That's we we fought and won the war. We don't support our troops giving their lives for our prosperity and then bail just because we may only be able afford 2 yachts until we climb out of the deficit.

The very rich will willingly give extra and share their bounty more, just out of gratitude for the vital role this nation's government and it's people here played to help make them so rich, even if they weren't also willing to do it as morally erect Christian patriots (which I think most of them count themselves)---and even if it is the elected government forcing them to share more of their wealth.

Can't believe anyone would suggest otherwise and slur these great Americans. Shame.

[Madison Redskin]

Why, then didn't all the wealthy flee the US in the 1950s, when the top tax rate was 91%? Or how about in the 1970s, when the top tax rate was 70%? Or how about in the 1980s, when the top tax rate was 50%? Nevermind that the top tax rates are at historic lows; believe the BS emanating from every one of Fox News' orifices that (1) if you raise taxes whatsoever on the "job creators" we're all ****ed and (2) the solution to the problem is to lower the historically low tax rates and put the squeeze on the poor.

[Mad Mike]

So are you actually arguing that they are going to leave the US?

NOT GONNA HAPPEN.

The two situations are totally different and even if the bush tax cuts expire for the top 2% they will *still* be well below the rates paid by the British.

http://en.wikipedia.org/wiki/List_of...s_by_tax_rates

[Corcaigh]

To get a complete picture you might also want to check what role the recession contributed to a drop in reported incomes.

The difference between what was implemented (50%) and what is proposed (45%) is a net tax payment of 49,250 per year from someone making 1,000,000, an effective 9% tax increase on non-dividend income. Dividend income is taxed at a lower rate.

Would two thirds of millionaires flee the country over this?

[PeterMP]

Also, we know in this country many of the super rich doen't even change their state to avoid higher taxes. It is a heck of a lot easier to change your state then to change your country.

http://www.mercurynews.com/elections...ike-california

"An analysis by this newspaper of IRS tax-return data shows that states that charge high income taxes -- from California to New York to New Jersey -- are home to the highest number of rich people per capita. And two-thirds of the states that don't charge any income taxes actually have fewer numbers of millionaire residents per capita, the analysis shows."

"Over the past 15 years, California has maintained the same share of the nation's ultrarich, even after voters passed the state's first "millionaires' tax" in 2004. That echoes the experience documented in studies of other states that have raised taxes on the wealthy.

"There just isn't any persuasive evidence out there to make you think that there would be a significant

number of Californians moving because of this tax change," said Carl Davis, senior policy analyst at the Institute on Taxation and Economic Policy, a nonpartisan research group based in Washington D.C."

Are people that likely already own multiple homes, but don't change their state residency really going to change their country?

I'll bet the British thing is/was an adjustment from the economic recession and/or people changing their behavior (in some cases likely short term changes in behavior) to change their tax rate vs. many people really left.

[Tulane Skins Fan]

So are you actually arguing that they are going to leave the US?

NOT GONNA HAPPEN.

The two situations are totally different and even if the bush tax cuts expire for the top 2% they will *still* be well below the rates paid by the British.

http://en.wikipedia.org/wiki/List_of...s_by_tax_rates

Yes, in America the super rich have two options if they decide to flee to avoid American taxes. They can go any other industrialized nation and pay even more in taxes. Or they can go to a third world country and pay less.

---------- Post added November-28th-2012 at 12:38 PM ----------

To get a complete picture you might also want to check what role the recession contributed to a drop in reported incomes.

The difference between what was implemented (50%) and what is proposed (45%) is a net tax payment of 49,250 per year from someone making 1,000,000, an effective 9% tax increase on non-dividend income. Dividend income is taxed at a lower rate.

Would two thirds of millionaires flee the country over this?

I bet it would cost more than that for these people to sell their homes and move their ****.

[deejaydana]

Central America is looking better and better (in truth I already had plans to move there) Obama thinks what France is doing to their rich is where we need to be. And did somebody liken "the rich" to cockroaches in this thread? For shame.

[Jumbo]

Central America is looking better and better (in truth I already had plans to move there) Obama thinks what France is doing to their rich is where we need to be. And did somebody liken "the rich" to cockroaches in this thread? For shame.

You talk of bailing out of the country (which is fine IMO) but you're going to call "shame" on someone who apparently plans on staying and dealing with whatever happens?

Of course you will.

[artmonkforHOF]

yeah, taxing the rich just won't work. How about taxing prisoners? You have enough of them, and if they all got a bill for say $75/day of incareration the day they get out, the national debt would be wiped out in a heartbeat! and if the prisoners don't pay, jsut throw them back in jail and charge them $150/day again, then when they get out the second time the government will be in for a BIG payday.

If Glenn Beck or Rush Limbaugh steals this idea from I'm going to be really ticked off.

[deejaydana]

You talk of bailing out of the country (which is fine IMO) but you're going to call "shame" on someone who apparently plans on staying and dealing with whatever happens?

Of course you do.

No I was calling him out for the 'evil rich' stereotype that's so popular these days. I find it just deplorably unAmerican. I really do. Somewhere along the line a cross section of society has moved from being inspired by the entrepreneurial spirit to an embrace of envy. I don't think it's really a productive viewpoint but I do see (and even empathize at times) where it comes from. And I'm not calling out that person because like all the other posters on the board, I don't know what path that chap has walked. I will say this, in moving to Central America I plan on giving up a lot of comforts because I believe it will make me---and my spouse---better, less materially driven people (which may come off as contradictory given much of my posting to date here). My wife is probably driving the "live a simpler, less material life" bus more than I am but God bless her for it. I do need it at times and I'm the better for it.